the adjusting entry to report the securities at fair value 1. Gorman Corporation has the following trading portfolio of stock investments as of December 31, 2013. Security Cost Fair Value A $21,000 $19,000 B 19,000 25,000 C 37,000 31,000 $77,000 $75,000 On January 22, 2014, Gorman Corporation sold security C for $32,000. Assuming that Gorman made the proper adjustments when closing its books on December 31, 2013, the journal entry for the 2014 sale would include a a. debit to Loss on Sale of Stock Investments for $5,000. b. credit to Unrealized Gainâ€“Income for $1,000. c. debit to Unrealized Lossâ€“Income for $5,000. d. credit to Fair Value Adjustmentâ€“Trading for $32,000. 2. Cosmic Company has the following data at December 31, 2013 for its securities: Securities Cost Fair Value Non-trading $46,000 $48,000 Trading 65,000 61,000 Based on this information, the adjusting entry to report the securities at fair value at December 31, 2013 will include a a. debit to Unrealized Gain or Lossâ€“Equity for $4,000. b. credit to Unrealized Gain or Lossâ€“Equity for $2,000. c. credit to Fair Value Adjustmentâ€“Non-Trading for $4,000. d. debit to Fair Value Adjustmentâ€“Trading for $4,000. 3. Benton Company has the following data at December 31, 2013 for its securities: Securities Cost Fair Value Trading $80,000 $82,000 Non-trading 94,000 91,000 On the financial statements, which of the following correctly explains the presentation of the related unrealized gain (loss) for these securities? a. An unrealized gain of $2,000 will be reported on the income statement under other revenues and gain. b. An unrealized loss of $3,000 will be reported on the income statement under other revenues and gain. c. An netted unrealized loss of $1,000 will be reported on the income statement under other revenues and gain. d. An unrealized gain of $2,000 will be reported on the balance sheet as part of stockholdersâ€™ equity. 4. All of the following statements about short-term investments are true except: a. Short-term investments are also called marketable securities b. Trading securities are always classified as short-term investments. c. Short-term investments are listed below accounts receivable in the current asset section of the balance sheet. d. Short-term assets must be readily marketable. 5. Non-trading securities are classified as a. short-term investments only. b. long-term investments only. c. either short-term or long-term investments. d. current assets only. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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